Gold miner Caledonia Mining Corporation, which owns and operates the Blanket mine, in Zimbabwe, intends to launch a private placement offering $100-million of convertible senior notes due 2033.

Caledonia will also grant the initial buyers of the notes an option to buy up to an additional $20-million (aggregate principal amount) of notes.

The notes will be general senior unsecured obligations of Caledonia and will accrue interest payable semi-annually in arrears.

Additionally, the notes will be convertible at the option of holders under certain conditions into cash, common shares of Caledonia or a combination of both, at Caledonia’s election.

The company will use the net proceeds from the notes to further develop the Bilboes gold project, in Zimbabwe, and for general working capital, as well as for the cost of capped call transactions.

Caledonia on January 14 said it would invest about $132-million on the Bilboes project this year.

Caledonia expects to enter into privately negotiated capped call transactions with one or more of the initial buyers of the notes or affiliates thereof.

The capped call transactions will cover the number of common shares initially underlying the notes.

The capped call transactions will generally compensate for potential economic dilution upon any conversion of the notes and offset any cash payments Caledonia is required to make in excess of the principal amount of converted notes – as the case may be – with such compensation offset being subject to a cap.

Caledonia advises that option counterparties may modify their hedge positions by entering into – or unwinding – various derivatives with respect to common shares in secondary market transactions following the pricing of the notes and prior to maturity of the notes.

Caledonia’s primary project remains the Blanket gold mine, in Zimbabwe, in which it holds a 64% interest.

In addition to Bilboes, the company is advancing the Maligreen and Motapa projects, which are also in Zimbabwe. The company plans to invest $162-million in its projects in the country this year.